SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHAD Q1 2025 Latest Quarterly Report Analysis

Core Data Highlights: A Mixed Bag of Growth

STMKB’s first quarter of 2025 saw a commendable increase in its core Takaful operations, yet net profitability was impacted by external market forces. Let’s break down the key figures:

Overall Financial Performance

The Group’s Takaful revenue surged by an impressive 19% to RM980.6 million compared to RM826.0 million in the same period last year. This growth was primarily fueled by higher contribution releases and increased Takaful coverage for Family Takaful, particularly from the Group Credit business.

Takaful Service Results showed a remarkable 123% increase, reaching RM118.2 million. This significant improvement, especially when excluding the movement of surplus attributable to participants, indicates enhanced efficiency and better profit from short-term business.

However, despite the strong operational performance, Profit Before Zakat and Taxation saw only a marginal 1% increase to RM151.1 million. More notably, the Profit for the Period declined by 7.5% to RM94.6 million, and Basic Earnings Per Share also decreased by 11.3% to 10.84 sen. This divergence from the Takaful service results can be largely attributed to higher tax expenses and zakat incurred in the current period, alongside a significant decrease in net investment income.

Segmental Performance: Family Takaful Leads Revenue, General Takaful Shows Efficiency

Family Takaful

The Family Takaful segment was a key driver of revenue growth, recording RM608.2 million in Takaful revenue, a substantial 35% increase compared to RM449.6 million in the same period last year. This was primarily due to higher Takaful coverage and increased contribution releases. However, the segment’s net investment income saw a sharp decline of RM84.2 million, largely due to fair value losses on financial assets stemming from unfavorable market movements in equity investments. This significantly impacted the segment’s overall financial results.

General Takaful

General Takaful revenue experienced a slight 2% dip to RM343.5 million, mainly due to lower contributions in the Fire Takaful segment. Despite this, the segment’s Takaful Service Results showed an improvement, driven by better claims and expense experiences. Net investment income for General Takaful increased by RM3.2 million, benefiting from an expanded portfolio size.

Strengthening Financial Health: A Solid Foundation

STMKB’s financial position remains robust, showcasing healthy growth in its balance sheet as at 31 March 2025 compared to 31 December 2024:

Total assets grew by 3% to RM17.19 billion, primarily driven by higher investments and cash and cash equivalents. Shareholders’ equity saw an impressive 11% increase to RM2.13 billion, bolstered by the net profit generated and an increase in share capital from the Dividend Reinvestment Plan (DRP).

The Group’s cash flow position remains healthy and strong, with cash and cash equivalents increasing to RM779.3 million. The ratio of cash flow from operating activities to profit for the financial period stood at a robust 113.8%, indicating the Group’s strong ability to generate sufficient cash to meet its obligations.

Risks and Prospects: Navigating a Dynamic Landscape

STMKB operates within a dynamic economic environment, and its latest report provides insights into both the challenges and opportunities ahead. Malaysia’s GDP growth for Q1 2025 landed at 4.4%, a marginally positive improvement from 4.2% in Q1 2024, albeit slightly below the lower end of the forecast range for FY2025. This growth was supported by sustained domestic demand, although tempered by a slowdown in net export growth.

The global economic landscape presents its own set of challenges, with ongoing tariff implementations by the United States leading to increased volatility in the investment market, including Bursa Malaysia. While escalating tensions and policy uncertainties are expected to have an indirect impact on Malaysia, the company anticipates domestic demand to remain robust.

Despite these headwinds, STMKB remains optimistic about the demand for Takaful and insurance products, citing a continuing gap in protection among the population. The company aims to leverage its position as a key player in the market, focusing on its core businesses in Bancatakaful, Treasury, Employee Benefits, and General Takaful as primary growth drivers.

Innovation is at the forefront of STMKB’s strategy, with plans to introduce new products that are relevant to customer needs, offering both value and protection. The digital segment, particularly its flagship “Kaotim” platform, is a key focus for growth and customer acquisition in the direct-to-retail general and family Takaful market. “Kaotim” aims to provide affordable Takaful products and establish a strong brand presence, especially vital in an inflationary environment where competitive pricing is crucial. Further product launches are planned for 2025.

Beyond financial performance, STMKB is committed to its sustainability and environmental responsibilities. Its holistic approach encompasses strong governance, environmental stewardship, responsible investments, and meaningful social contributions, aiming to create a lasting positive impact for all stakeholders.